Diabetes and obesity represent perhaps the greatest healthcare challenge facing the nation. Novel therapeutic targets and strategies are required to address this major unmet medical need. The ability to modulate signal transduction pathways selectively holds enormous therapeutic potential. To date, drug discovery efforts in signal transduction have emphasized the protein kinases, in particular protein tyrosine kinases (PTKs), and the first drugs directed against PTKs represent breakthroughs in therapy. Nevertheless, these approaches remain in their infancy and the development of novel strategies to interrogate protein tyrosine phosphorylation- dependent signaling pathways will have a profound impact on drug development in major diseases. PTP1B is an important regulator of signaling by the insulin and leptin receptors and has been a highly prized target in the pharmaceutical industry for therapeutic intervention in diabetes and obesity. Consequently, there have been major programs in industry focused on developing small molecule inhibitors of PTP1B to promote insulin signaling in resistant states. Nevertheless, these efforts have been frustrated by technical challenges arising from the chemical properties of the PTP active site. In particular, although it is possible to generate potent, selective and reversible active site-directed inhibitor, the tendency for such molecules to be highly charged, such as pTyr-substrate-mimetic, presents problems with respect to their oral bioavailability and limits their drug development potential. As a result, industry views PTPs as challenging targets and what is needed are innovative strategies to generate inhibitors of this highly validated target that exhibit greater drug development potential. This proposal, which is the fourth competing renewal of a grant currently in Year 17, seeks to validate a novel approach to the development of inhibitors of PTP1B that involves harnessing a physiological mechanism for regulation of PTP1B function that reflects a new tier of control of tyrosine phosphorylation- dependent signaling. In the previous funding period, recombinant antibodies were generated that recognize selectively the oxidized conformation of PTP1B (PTP1B-OX) and function as insulin-sensitizers when expressed in cells as intrabodies. In this proposal, the mechanistic basis for the interaction of these antibodies with PTP1B-OX will be defined and the hypothesis that stabilization of the oxidized, inactive form of PTP1B represents a novel approach to promoting the signaling response to insulin and leptin will be tested further, focusing on cell and animal models of diabetes and obesity. It is anticipated that the successful completion of this project will generate important insights into th mechanism and significance of redox regulation of PTP1B and will validate a unique strategy for development of PTP inhibitors that would involve generation of small molecule drug candidates that mimic the effects of these PTP1B-OX-specific antibodies. This work has the potential to transform our thinking and open up a new approach for therapeutic intervention in a major disease. To achieve this goal, the Specific Aims of the proposal are: Aim 1: Define the molecular basis for recognition of oxidized form of PTP1B by conformation sensor scFv antibodies. Aim 2: Define the regulatory effects of phosphorylation of Tyr 46 in PTP1B-OX. Aim 3: Test the effects of conformation-sensor scFv antibodies on insulin signaling in cell and animal models. Aim 4: Test the effects of conformation sensor scFv antibodies on leptin signaling in cell and animal models.